Small businesses, especially those in the hospitality industry, will face a treacherous path forward during the next four weeks as new coronavirus restrictions go into place and a new relief package from the federal government remains held up.
Minnesota Gov. Tim Walz acknowledged the dreadful outlook Wednesday night as he announced bars and restaurants would close to indoor service for the second time since March as the state faces an alarmingly high COVID-19 infection rate that is pushing hospitals to the brink.
The new restrictions take effect at 11:59 p.m. Friday and also close theaters, bowling alleys and other entertainment venues, pauses weddings and post-funeral gatherings and puts a hold on organized youth sports — all for at least the next four weeks until Dec. 18.
In recent weeks, Minnesota has risen from the middle of the pack in COVID-19 infection rates — 21st two weeks ago — to the seventh worst rate in the nation, a 15.3 percent positivity rate and about 80 percent of its total hospitalizations in the last two weeks.
“These people are heroic,” Walz said of business owners. “Other nations have gone on to handle this. Their businesses are open — their economy is coming back — unlike here, where we’re mired in this. My heart breaks for them. It’s grossly unfair.”
What could help, the governor said, is a federal relief package that Congress has debated for months despite broad support from governors and both President Donald J. Trump and President-elect Joseph R. Biden Jr. Walz said he would support a tuned down relief package that focused on small businesses and their employees to assist them while operating under restrictions that help keep people home.
“It’s very difficult because states can’t run on a deficit,” the governor said. “The federal government has grossly failed on its responsibility.”
He added that Minnesota put out $10 million last week targeting small businesses and he hopes the Legislature is thinking about what else it can do. Saying all 50 governors have voiced their support for a federal package — citing the same deficit restraints — Walz continued: “Congress needs to figure out how that aid gets here.”
The new restrictions faced criticism Wednesday from state Republicans and business groups representing bars and restaurants across the state. Some of that criticism was focused on the timing of the announcement as cases have rapidly spread for the last few weeks, with only a 48-hour window for businesses to adjust. Walz defended the timing, saying they “knew the potential was certainly there” to reach this point in late October, but the situation quickly deteriorated.
Business groups turned the brunt of their criticism and frustration on what the future holds for many in the hospitality industry when the four-week period concludes, provided the governor lifts the current restrictions. They cited the lack of state or federal aid currently available and said that bars, restaurants and others made sizable investments to protect staff and customers to stay open.
“Today’s action will push many small restaurants, food service and other hospitality businesses over the cliff," said Liz Rammer, president and CEO of the trade group Hospitality Minnesota, in a statement.
Tony Chesak, executive director of the Minnesota Licensed Beverage Association, said the new restrictions will lead to increased unemployment and many businesses to go under ahead of the holidays.
“Bars and restaurant leaders and staff are heading into a bleak holiday season with little to no support from our elected leaders,” he said in a statement. “The state and federal government both need to take steps to aid employees and the hospitality industry with relaxed regulations, direct financial support, unemployment assistance, and loans to get through this dark winter.”
Steve Grove, commissioner of the Department of Employment and Economic Development, told reporters Wednesday that the new restrictions will be “devastating” in the short term and “it’s clear some businesses won’t make it through the end of the year.”
But, he added, the long-term outlook is important. Pointing to the IHS Markit report on the state’s prolonged job growth, he said if one assumes that a vaccine comes and the virus is mitigated, the state could regain lost jobs from COVID-19 by the end of 2022. If unmitigated spread continues as it is, that date is pushed back to late 2023.
In a show of optimism, Walz said Wednesday that night that the state could be vaccinating its most vulnerable population and health care workers by the end of the four-week restrictions.
Health Commissioner Jan Malcom said the metrics state officials will use to determine if restrictions should continue, phase out or end include a decrease in hospitalization rates and a “critical metric” of reduced case growth per 100,000 residents.
Malcolm and Walz noted the state is hitting its testing goals set this past spring. It’s averaging about 50,000 daily tests with a capacity for about 75,000. By comparison, Malcolm said, Minnesota was testing one-tenth of what is now back in April.
The four-week timeframe accounts for two incubation cycles of the coronavirus, but two weeks into record-high peaks, the state is hoping to see the positive impact of the new restrictions showing up in weeks three and four.
“The next two weeks are dire — these cases are already in the pipeline,” Malcolm said, noting more of the current patients will be hospitalized, placed in intensive care and rank among the fatalities.